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NSE Intra-day chart (09 October 2019)
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Market Commentary 10 October 2019
Benchmarks likely to open in red; TCS result eyed

 

Indian equity bourses broke 6-day losing streak on Wednesday to end higher. After a cautious start, indices traded subdued in early morning, as India has come down by 10 places to rank 68th in the annual Global Competitiveness Index compiled by Geneva-based World Economic Forum (WEF) from 58th rank earlier. It is mainly due to improvements witnessed by several other economies. But, markets gained traction in late noon deals, amid a report that the Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi saw keen interest from foreign investors in emerging areas such as REITs and InvITs, which have a total asset size of more than $10 billion. In the second half of the session, benchmarks extended their gains to settle near their intraday high points, tracking firm European markets. Market participants also took support with a report stating that the Indian economy needs a boost and a slip in the fiscal deficit by 40 to 50 basis points will be a good trade-off if it propels demand. Separately, in line with the government's aim to make India digital, the Reserve Bank of India (RBI) has directed all state/UT Level Bankers Committees (SLBCs/ UTLBCs) to identify one district in their respective states/ UTs on a pilot basis in consultation with banks and stakeholders, to expand digital payments ecosystem. Finally, the BSE Sensex gained 645.97 points or 1.72% to 38,177.95, while the CNX Nifty was up by 186.90 points or 1.68% to 11,313.30.

 

The US markets ended higher on Wednesday as traders hoped for some kind of deal to come from US-China trade talks beginning on Thursday, even if it is a limited pact. Private report said that China is prepared to accept a partial trade deal as long as no more tariffs are imposed by President Donald Trump. The report added that Beijing would offer non-core concessions like purchases of agricultural products in return, but not budge on major sticking points between the two nations. Besides, traders largely shrugged off the minutes of the Federal Reserve's September monetary policy meeting, which revealed a few participants expressed concerns that the markets expect more interest rate cuts than are appropriate. The minutes said those participants felt it might become necessary for the Fed to seek a better alignment of market expectations regarding the path of rates with policymakers' own expectations. On the economic front, a report released by the Commerce Department showed a modest increase in US wholesale inventories in the month of August. The Commerce Department said wholesale inventories edged up by 0.2 percent in August, matching the uptick in July. Street had expected inventories to increase by 0.4 percent. The report said inventories of durable goods rose by 0.3 percent, while inventories of non-durable goods crept up by 0.1 percent. Meanwhile, the Commerce Department said wholesale sales came in virtually unchanged in August after rising by 0.2 percent in July. Wholesale sales were unchanged as a 0.3 percent increase in sales of durable goods was offset by a 0.3 percent drop in sales of non-durable goods. The report also said the inventories/sales ratio for merchant wholesalers came in at 1.36 in August, unchanged from the previous month.

 

Crude oil futures ended marginally higher on Wednesday, giving up earlier gains, following the release of a report showing an increase in US crude inventories in the week ended October 4. The Energy Information Administration (EIA) reported that US crude supplies climbed for a fourth week in a row, by 2.9 million barrels for the week ended October 4. They were forecast to increase by 2.4 million barrels. The American Petroleum Institute on Tuesday reported a rise of 4.1 million barrels. Cautiousness also prevailed in the oil markets as minutes from the Federal Reserve's September meeting raised worries about the economy. Benchmark crude oil futures for November declined 4 cents or 0.08 percent to settle at $52.69 a barrel on the New York Mercantile Exchange. However, December Brent gained 8 cents or 0.1 percent to settle at $58.32 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended marginally lower against US dollar on Wednesday, due to fresh demand for the American currency from banks and importers. Traders remained cautious with a report that India has moved down 10 places to rank 68th on an annual global competitiveness index, largely due to improvements witnessed by several other economies, while Singapore has replaced the US as the world's most competitive economy. However, weakening of the US dollar vis-a-vis other currencies overseas and easing crude oil prices supported the domestic unit and restricted the fall. On the global front, dollar slipped against the safe-haven Japanese yen on Wednesday amid renewed trade-related worries and as an unexpected drop in US producer inflation supported the case for the Federal Reserve room to cut interest rates again later this month. Finally, the rupee ended at 71.07, 5 paise weaker from its previous close of 71.02 on Monday.

 

The FIIs as per Wednesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3087.48 crore against gross selling of Rs 3455.22 crore, while in the debt segment, the gross purchase was of Rs 829.56 crore with gross sales of Rs 472.07 crore. Besides, in the hybrid segment, the gross buying was of Rs 26.65 crore against gross selling of Rs 29.26 crore.

 

The US markets ended higher on Wednesday as traders hoped for some kind of deal to come from US-China trade talks beginning on Thursday. Asian markets are trading mixed on Thursday amid no signs of progress in trade talks between the US and China. Indian markets snapped six-day losing streak and ended higher with gains of over one and half a percent each, led by gains in telecom and banking stocks. Today, the markets are likely to make a pessimistic start amid mixed cues from Asian peers. Investors will be looking ahead to the start of July-September quarter earnings season, with IT bellwether TCS reporting its Q2 numbers later in the day. There will be some cautiousness with a private report that a workforce analysis of listed companies reveals that the job loss in public sector was one of the worst in the recent times. In contrast to an increase of 9.2 per cent headcount in private sector, the public sector saw a decline of 2.6 per cent in FY19. Traders may take note of CARE Ratings' report that even as the announcements by Finance Minister Nirmala Sitharaman are expected to boost investor sentiment in the near term, the overall economic improvement is expected by the next fiscal. It added that the investment is only expected to pick up depending on sustained rise in consumption demand over a period. However, some support may come later in the day with report that in line with schemes like Start-up India and Stand-up India aimed at young entrepreneurs, Agriculture Minister Narendra Singh Tomar will launch the Yuva Sahakar-Cooperative Enterprise Support and Innovation Scheme 2019 with an annual outlay of Rs 100 crore.  Meanwhile, with overall financial flows to the commercial sector declining sharply by 88 per cent during the first six months of the current financial year amid the slowdown in the economy, Finance Minister Nirmala Sitharaman has called for a meeting with CEOs of public sector banks (PSBs) next week to consult on ways to boost credit offtake. Banking stocks will be in focus with a private report that with bad loans having been largely recognised, the worst may be over for banks but second quarter earnings could still be muted. There will be some reaction in logistics stocks with ICRA's report that the domestic logistics sector is set to grow at 8-10 per cent over the medium term with the outlook remaining largely stable. The key drivers for demand pick-up would be the festive season as well as the anticipated revival in infrastructure spending post monsoon and improvement in receivable cycle of contractors.

 

Support and Resistance: NSE (Nifty) and BSE (Sensex)

 

Index

Previous close

Support

Resistance

NSE Nifty

11,313.30

11,161.77

11,393.22

BSE Sensex

38,177.95

37,659.24

38,453.25

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

240.70

43.25

41.05

45.45

SBI

603.29

260.95

249.53

267.18

Tata Motors

603.29

120.90

117.00

123.25

ICICI Bank

345.34

436.70

437.27

437.27

ZEEL

255.09

240.70

234.93

252.23

 

  • Bharti Airtel's subsidiary -- Airtel Africa has entered into a partnership with Mastercard. 
  • Titan Company has purchased 9,45,000 equity shares from one of the shareholders of CaratLane, thereby increasing its stake in the subsidiary by 2.8%, from 69.5% to 72.3%. 
  • TCS has expanded its strategic partnership with Legal & General, to help L&G transform into a digital workspace leveraging TCS' Machine First Delivery Model and design thinking approach. 
  • Tech Mahindra has launched a 5G-enabled solution to build wireless and secure factory of the future.
News Analysis